Back to the Futures: Lumber prices up, corn and beans sprout higher

Housing hoists lumber prices

A slew of shockingly good housing data shook US markets this week, especially lumber. Reports showed that construction of new homes is rising from the post-recession doldrums and that sales of existing homes increased for the fourth straight month.

Lumber, which is closely tied to the construction industry, has been rising with the restrengthening housing market, reaching a five-month high Friday at $355 per thousand board feet. Though still down drastically from the 2004 peak price of $460, lumber has been gaining due to better US housing data and ongoing demand from developing countries, especially China. Although the Chinese import most of their lumber from Russia and Canada, China's impact on the global market raises local US lumber prices as well.

Alongside lumber's rally, copper prices gained as well, climbing to a ten-day high Friday at $3.21 per pound. Construction of new homes consumes a large volume of the red metal for piping, wiring, and appliances.

Next week, there will be even more data for real estate watchers, including the government's New Home Sales and a private measure of housing prices, the Case-Shiller 20-city Index.

Corn and bean yields sprout higher

The widely followed seven state ProFarmer crop tour confirmed expectations that corn and soybeans are growing very well and are likely to produce bin-busting crops. The tour's estimates this week predicted corn yields of 164 bushels per acre out of Nebraska, Illinois at 197, and Indiana at 185 bushels per acre, all well above previous estimates.

Data for soybeans, especially in Illinois, hint that record large crop is doing very well too. Beans are in their pod-setting stage and benefiting from recent rains through much of the mid-west.

These figures and data from other states have weighed on prices and suggest farmers will have plenty of grain to sell, but at prices way below last year's profitable levels. However, strong domestic demand has helped to stabilize prices near recent lows.

As of midday Friday, soybeans for delivery this November were worth $10.42 per bushel, while December corn traded for $3.72.

Opinions are solely the writer's. Walt Breitinger is a commodity futures broker with Paragon Investments in Silver Lake, KS. He can be reached at (800) 411-3888 or www.indianafutures.com. This is not a solicitation of any order to buy or sell any market.